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Category: Hicks on Biz columns from The Edmonton Sun

Hicks on Biz columns from The Edmonton Sun

Hicks on Biz: Daryl Katz sensed the time was right to get out of drug retail business BY GRAHAM HICKS, FIRST POSTED EDMONTON SUN: FRIDAY, MARCH 04, 2016

What was Daryl Katz doing, selling his Rexall drug store chain upon which he built his current fortune, for $3 billion to American pharmaceutical giant McKesson? It’s about being where the puck is going, not where it is. It’s about long-term vision, strategic transformation and deliberate disruption, about Katz becoming a global business player, rubbing shoulders with the likes of Warren Buffet, Bill Gates and Mark Zuckerburg. In the drug retail business, Katz sensed the time to exit is now, while the going is still good. Rexall is primarily a bunch of drugstores, but the North America drug business is increasingly consolidating into “vertical integration”. The same mega-companies, i.e. McKesson, manufacture, distribute and retail drugs. Katz didn’t see himself in drug manufacturing and distribution. He saw the storm clouds on the horizon if Rexall continued as only a drug retailer. Obviously he was offered good coin to sell to McKesson. Buying the Oilers in 2008, ... Read the rest of entry »

Hicks on Biz: Diversification and KMT Hepatech BY GRAHAM HICKS, FIRST POSTED EDMONTON SUN: FRIDAY, FEBRUARY 26, 2016

In Northern Alberta, “diversification” is near impossible. At least 30% of the $306 billion that moved around Alberta’s economy in 2014 (the last year for which the province has these numbers) came directly from oil and gas production. CAPP – the Canadian Association of Petroleum Producers – pushes that figure up to 42% when including energy-sector dependents like oilfield maintenance, fabrication, accounting, legal services and so on. It’s pie-in-the-sky, quite ridiculous to suggest – as have several of our current provincial cabinet ministers – that Alberta can transition away from gas and oil production, yet maintain our quality of life. The answer, articulated so well by Saskatchewan Premier Brad Wall and badly articulated by Alberta’s current New Democrat government, is that “diversification” should be primarily directed to the industry that we are really, really good at. The production, transportation and end-use of fossil ... Read the rest of entry »

Hicks on Biz: Northlands, an existential crisis BY GRAHAM HICKS, FIRST POSTED EDMONTON SUN: FRIDAY, FEBRUARY 19, 2016

While the city has been all a-buzz about Northland Park’s Vision 2020 that was released on Wednesday, an existential question has not been asked. Why does the City of Edmonton still need Northlands Park? In any emotion-free analysis, the most cost-effective way forward is to reduce Northlands’ operations down to its EXPO Convention Centre and K-Days, then shut down/sell off everything else. The case is cruel, given the not-for-profit Northlands willingly brought itself to the sacrificial alter for the greater good of Edmonton. Northlands gave up all hockey-related Rexall Place profits to the Oilers to keep the team in town back in the ‘90s. It has now accepted the closure of Rexall Place, sending all those concert profits over to the equally subsidized Rogers Place. Talk about signing your own death warrant. But for all the quality-of-life and greater-good arguments within the well-reasoned Vision 2020, there’s huge risk. To survive, Northlands is likely to forever suck furious ... Read the rest of entry »

Hicks on Biz: Edmonton real estate market depends on full employment in public sector BY GRAHAM HICKS, POSTMEDIA NETWORK FIRST POSTED: THURSDAY, FEBRUARY 11, 2016

You have to forgive realtors. They are relentlessly optimistic. The economy is dropping like a rock. A great time to buy! The economy is sizzling red-hot. A great time to sell! I was impressed with the reasonably objective research and conclusions of Edmonton realtor (and ex-accountant) Kathy Schmidt, in her monthly The Schmidt Report. The sky is not falling, she argues, not in Edmonton’s housing market. It has crashed down in Fort McMurray, it’s falling in Calgary, but here, we’re just a little overcast. Median house prices are down – about 3% — in most of Metropolitan Edmonton, a median price of about $340,000 compared to $350,000 at this time last year. (“Median” excludes the very top and very bottom ends of the housing market. At the top end, Edmonton houses listed at $600,000 or more are down more than 3%.) But the market, Schmidt says, is busy. More homes (houses and condos) were sold last month than were sold in January a year ago. Th ... Read the rest of entry »

Hicks on Biz: Understanding carbon credits BY GRAHAM HICKS, POSTMEDIA NETWORK FIRST POSTED: THURSDAY, FEBRUARY 04, 2016

Finally, through a company created to save the planet AND make money, I actually understand what “carbon credits” are all about. Airdrie-based Carbon Credit Solutions (CCS) Inc. partners up with folks (mostly farmers) who can create Alberta government-approved carbon credits. It assists in “making” these carbon credits, then buys and sells them, hopefully for a profit. Making a profit can’t be that difficult, not when the monetary value of these Alberta carbon credits should jump by 50% in a year’s time. That’s when the Notley government says it will raise the levy, basically a tax on excess carbon emission, from $20 to $30 a tonne on companies pushing too much CO2 up their smokestacks. (A tonne of CO2 is roughly the amount of CO2 an average coal-burning power plant sends up its smokestack every hour.) Companies either pay the levy, or they can purchase carbon credits from companies like CCS to offset excess CO2 emissions. The market value of a carbon cred ... Read the rest of entry »

HICKS ON BIZ Alberta has a case for coal BY GRAHAM HICKS, POSTMEDIA NETWORK FIRST POSTED: MONDAY, FEBRUARY 01, 2016

Under Premier Rachel Notley’s Climate Leadership Plan, by government decree, all coal-burning power plants in Alberta are to be shut down by 2030, with the goal of replacing 50% to 75% of that power with renewable energy. Meanwhile, the provincial demand for electricity will grow from 14,500 megawatts (MW) today, to 17,500 MW by 2030. This is the triumph of ideology over evidence-based science. This illogical, ill-conceived government decree will result in wasting billions of dollars with no net environmental gain. Today in Alberta, there are 18 major coal-burning power generation units. Four are close to the end of their useful lives and will close within two years. Of the 14 still operating, six will still have plenty of juice left come 2030. The case for coal: coal is the cheapest, most reliable source of electricity in Alberta, crucial in keeping Alberta’s industry competitive. In 2015, it provided 43% of the province’s power. Environmentally, thanks to technological in ... Read the rest of entry »

Hicks on Biz: DynaLIFE versus the Alberta Health Services BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, JANUARY 22, 2016

Playing with people’s livelihoods is no small matter. The streets of Edmonton were abuzz this past week, with news of 35 layoffs in the newsrooms of the Edmonton Journal and Edmonton Sun. But, just blocks away, the jobs of 1,200 skilled medical laboratory professionals are still up in the air. Nobody – the city, the province, the unions, the medical community - seems to care. The fate of DynaLIFE’s employees remains in the hands of the rudderless Alberta Health Services (AHS), now being run by yet another interim CEO. AHS has already worked over the DynaLIFE employees once through ineptitude, and may yet do so again. DynaLIFE Dx is a medical laboratory services company, owned by two other medical giants, the Canadian LifeLabs and the American LabCore. Since 1995, DynaLIFE Dx (and its predecessors) has been contracted by Alberta Health Services (and its predecessors) to handle routine hospital and community medical lab testing services for Northern Alberta. DynaLIFE Dx&rsquo ... Read the rest of entry »

Hicks on Biz: The days are dark, but there will be light! BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, JANUARY 15, 2016

In the darkness, rays of light. Edmonton Economic Development boss Brad Ferguson told the blunt truth Tuesday in his speech at the agency’s Impact Luncheon. Global trends – the two-thirds drop in the price of oil, on-going low prices for natural gas, growing government debt, stalled global economic activity – are all against Alberta’s interest. Nationally, the weak Canadian dollar, provincial and national governments' “toxic” borrowing and lack of new pipelines are further screwing up our provincial well-being. The new provincial government has focused on economic and environmental reforms, on safe-guarding the public sector - just as economic growth dramatically slowed. If the status quo carries on, Ferguson said – the endless government borrowing, the drop in employment opportunity, the loss of the “Alberta Advantage” for business – it will rip apart the social fabric of Alberta. - Related: Alberta's self-employment numbers jumped ... Read the rest of entry »

Hicks on Biz: Can't someone else own and operate Edmonton's transit service? BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, JANUARY 08, 2016

Tristan Hopper, Edmonton-based reporter for the National Post’s National Desk, has written a scathing critique of the new Metro LRT (Light Rail Transit) line – how not to build new urban rail transit – that is devastatingly accurate, and superbly written as well. The main issue has been the city’s decision to build new LRT lines at grade as much as possible, primarily to save money in the short-term. Hopper makes mince-meat of the alleged money-saving, pointing out that deliberately creating traffic gridlock at LRT at-grade crossings makes no sense whatsoever. Environmentally, vehicles are idling six to 15 minutes while waiting at LRT crossings. Efficiency goes out the window when hundreds of commuters and bus riders are held up by one LRT. And Hopper mentions, tongue-in-cheeky, the “spiritual” cost of wasted time and irritation. Hopper is right. So much so that Mayor Don Iveson, city council, Acting City Manager Linda Cochrane and Transportation Manager Dorian ... Read the rest of entry »

Hicks on Biz: How did we do? BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: THURSDAY, DECEMBER 31, 2015

So how did this column do last year? How good was Hicks on Biz in reading business trends, on gazing into Edmonton’s economic future? Not bad, I’d say … with one big blooper that’ll haunt me for years. I said the Metropolitan Edmonton economy would dodge multiple bullets in 2015, and I was right. Despite the colossal drop in commodity prices, despite the economic hardship now pummelling Fort McMurray and Calgary, Edmonton did surprisingly well. City of Edmonton Chief Economist John Rose had predicted 3% growth in the Edmonton economy in 2015, with 20,000 new jobs. It looks like we’ll leave 2015 with a 3.8% growth rate and a net gain of 28,000 new jobs. It’s always good when an economist is too conservative! I said, back in August, that recession will hit Edmonton, hurricane-force, sometime in late January/February of 2016. Business activity will slow down, layoffs will be the order of the day, house prices will drop. In short, that 2016 will be a very, ve ... Read the rest of entry »